Sebi likely to rework REIT rules to lure in FIIs, HNIs

Ireo Waterfront, located in Ludhiana, Punjab, is a 500 acre township

Ireo Waterfront, located in Ludhiana, Punjab, is a 500 acre township

The Securities & Exchange Board of India may amend the dormant guidelines governing real estate investment trusts to lure international investors into investing in them as various arms of the government scramble to defend the sliding rupee.

A new set of rules may soon be announced by the regulator which would make it easy for wealthy Indians and international investors to buy into these trusts that provide regular income like bonds or bank deposits, said two people familiar with the development.

The new format for the so called REIT will keep away retail investors as such investments with liberal guidelines may not be appropriate for those with less risk appetite.

“We are working on a new set of guidelines that will be attractive to FIIs,” said a person at the market regulator who did not want to be identified. But it will be out of bounds for retail investors since the relaxed guidelines will be a risky proposition for them, he said.

Indian regulators are looking to re-draft the Real Estate Investment Trust, or REIT, guidelines to draw foreign investment to shore up the rupee. The initial guidelines announced in 2006 were so onerous that not a single trust was founded. One of the conditions was that the trusts have to declare the net asset value on a daily basis, a requirement quite impossible in the real estate market where similar properties do not trade on a daily basis.

Read more: The Economic Times

I have been a believer in Indian equities

This is just one of the lessons you learn from Vibha Padalkar, Executive Director and Chief Financial Officer, HDFC Life, as she shares her insights on investments in an interview with Business Line.

What was your first investment?

At my father’s insistence, I kick-started my investments by opening a Public Provident Fund (PPF) account. I kept investing regularly into this account.

I also bought an endowment policy with a life cover, which in hindsight, forced me to save regularly.

How much do you set aside for investments?

I keep aside 40-45 per cent of my income for investments.

What are your current investments? How are they spread across different asset classes?

I have always been a believer in Indian equities and real estate. I don’t directly invest in equities, given the restrictions of working in the financial services space. So I invest in equities via growth-oriented mutual funds.

I choose to keep away from sector specific funds. I also have a diversified portfolio consisting of real estate, mutual funds (both debt and equity), and gold exchange traded fund (ETF).

Has your portfolio mix changed significantly in the last few years?

I started off investing in financial products and went on to add real estate and gold ETF to my portfolio. The latter two have been more recent additions, in the past 5 years.

Read more: Business Line

PE Firms Invest Nearly $ 6 Bn During H1 2013: Thornton

Private equity firms have pumped in USD 5.9 billion across 204 deals in the country during first half ended June 2013, a solid increase of 55 percent compared to same period last year, says a report.

According to audit and advisory firm Grant Thornton, the year began on a sluggish note, but in the second quarter (April-June), there was a significant resurgence in private equity deal activity.

PE deals in April-June period was three-times the level of PE activity seen in the previous quarter with real estate, manufacturing and IT/ITES dominating the space, it said.

There were 11 PE investments worth over USD 100 million.

Moreover, there were six above USD 200 million during H1 2013 compared to just one deal over USD 200 million in H1 2012.

Qatar Foundation’s USD 1.2 billion investment in Bharti Airtel was the top PE deal in H1 2013.

“A few top PE transactions during the period involved the buyout of existing PE investors, thereby infusing fresh lease of life into exit avenues,” the report said.

KKR’s multi-million acquisition of a majority stake in Alliance Tire Group (from PE investor Warburg Pincus and the promoters) and Partners Group’s USD 270 million buyout of the existing PE investors SAIF, Goldman Sachs and Sierra Ventures in CSS were some instances of big deals.

Read more: Silicon India

NRIs

FICCI call to issue NRI bonds

Indian industry body has suggested that banking regulator Reserve Bank of India (RBI) should use measures such as issuing of Resurgent India Bonds (RIB) to curb volatility.

The Indian rupee has depreciated against the US dollar in the past weeks and continues to hover around the Rs 60-mark vis-a-vis the US  dollar. Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) in their economic outlook survey has stated that the government may consider options such as NRI bonds, offshore rupee bonds and tailor made attractive schemes to raise FDI (foreign direct investments)  in real estate as well as infrastructure sectors. The Indian government recently liberalised many sectors like telecom, retail, aviation and real estate among other sectors here hoping to attract huge FDI.

FICCI said that there was a need for development of long-term maturity corporate and sovereign debt markets and thereby improve foreign fund flows into longer maturity instruments of debt markets. It  also sought more efficiency in land acquisition, which has been the bane for many companies willing to set shop here.

South Korean steelmaker, Posco and the world’s largest steelmaker ArcelorMittal pulled out of their Rs 30,000 crore and Rs 50,000 crore projects respectively, citing delays in land acquisition among other reasons.

Read more: Indian Express

A depreciating rupee has fuelled interest among NRIs to invest in realty in their hometowns

The Indian rupee’s fascination for the Rs60-mark against the US dollar has Government of India (GoI) concerned, but real-estate developers in the city see the trend as silver lining in the dark clouds of slowdown.

They have pinned their hopes of a ‘Happy Diwali’ on realty investment inquiries from Non-Resident Indians (NRIs), provided the rupee remains stable at the current rate of Rs59.33/dollar (July 19, 2013).

Inquiries from NRIs have started trickling in the real-estate market and the interest is courtesy huge appreciation in rupee against the greenback. Developers thus have a reason to smile.

The vice-president of National Realtors Association (India), Pravin Bavadiya, says there is an increase of about 10% in inquiries from NRI investors following depreciation of the rupee. “People with surplus wealth and craving to buy good property in their hometowns have started inquiries,” says Bavadiya.

“The rupee depreciation will make homes cheaper for NRIs by 20-25%, compared to local buyers; so it’s a right time (for NRIs) to invest in the market,” says Dinesh Patel, president of Confederation of Real Estate Developers Association of India (Credai), Gujarat chapter.

Read more: DNA

Real Estate

Bigger NCR may aid realty boom

Signboards of Levi’s Reebok, Nike and Adidas – symbolic of the consumption pattern of the locals – greet you as you enter Bhiwani in Haryana, in contrast to the bumpy roads on way to the town, some 125 km from Delhi. Another 70-80 km, and you are in Mahendragarh, where a Muthoot Finance’s office and an under construction DPS (Delhi Public School) are the first landmarks.

Bhiwani and Mahendragarh, besides Bharatpur in Rajasthan, are the latest entrants in the NCR (national capital region), which already has 16 districts spanning around 38,000 km in its kitty from Haryana, Uttar Pradesh and Rajasthan. While there’s excitement around the new-found status of these places, questions are being asked as to whether the move would boost the economy or bring any development to these areas. Among other things, many real estate consultants are weighing the option of doing a price projection survey for the new NCR locations.

Bharatpur in Rajasthan, which houses the famous bird sanctuary about 200 km away from Delhi, has already started seeing signs of real estate development. On the Jaipur-Agra highway, Surya Builders and Developers is constructing a small gated apartment society, where possession for 20 residential units (2BHK) has already been given, while another 20 are being built. “Many in Bharatpur want to shift to apartments now. And some are coming from outside to work as the region has some mustard oil factories,” Anurag Garg, director, Surya Builders and Developers, said.

Read more: Business Standard

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